Sections 25-26 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 25 deals with the cost of mediation. The cost, other than for community mediation, is such as may be specified, and unless the parties agree otherwise all costs, including the mediator's fees and the provider's charges, are borne equally by the parties. Section 26 says the Act does not apply to proceedings of Lok Adalat and Permanent Lok Adalat under the Legal Services Authorities Act, 1987.
Section 25(1): the cost of mediation, other than community mediation, is "such as may be specified", so the amount is left to regulations of the Mediation Council of India. Section 25(2): unless the parties agree otherwise, all costs, including the mediator's fees and the mediation service provider's charges, are borne equally by the parties. Section 26: the Act does not apply to Lok Adalat and Permanent Lok Adalat proceedings. The Act comes into force by notification, and the date is not in the text consulted.
Section 25(1): the cost is left to regulations
Section 25(1) says "The cost of mediation, other than community mediation shall be such as may be specified." "Specified" means specified by regulations made by the Council (section 3(y)). No regulations are in the text consulted, so this article states no fee, scale or amount, and the Act itself fixes none. Two points about the wording:
- Community mediation is carved out. Chapter X (sections 43 and 44) deals with community mediation separately, and section 25(1) does not govern its cost. See our article on community mediation.
- No statement that mediation is without charge. The section talks of a cost that will be specified. Nothing in it describes any mediation as costless, and readers should not assume that it is.
If you are budgeting for a mediation and want a realistic plan for the steps and the people involved, our mediation services team can help you set it up.
Section 25(2): equal sharing unless agreed
Section 25(2) says "Unless otherwise agreed by the parties, all costs of mediation, including the fees of the mediator and the charges of the mediation service provider shall be borne equally by the parties." Read it in parts:
| Part | Meaning |
|---|---|
| "Unless otherwise agreed by the parties" | The parties can agree a different split, for example in the mediation clause or in a later agreement |
| "All costs of mediation" | Wide wording, not limited to fees |
| "Including the fees of the mediator and the charges of the mediation service provider" | These two are named; others fall within "all costs" |
| "Borne equally by the parties" | Default: equal shares |
The default rule is equal sharing. It does not depend on who wins or who started the mediation. A business that expects to initiate the process may want to agree in advance who bears what; if you stay silent, the default applies. If a party wants to shift costs, for example a larger party bearing a larger share, the safe course is to say so in writing in the mediation agreement or the submission agreement; see our article on the mediation agreement.
The sub-section speaks of "parties", and "party" is defined in section 3(s). Where there are more than two parties, "equally" would be read across the parties; the text consulted does not elaborate on that.
What the sub-section does not say
Section 25 does not say who pays the cost up front, when it is payable, or what happens if one party does not pay its share. It does not say whether the mediator may withhold the settlement agreement or the non-settlement report until payment. It does not allow a cost order, and it does not say that cost follows the event. Those matters are not in the text consulted, and the regulations on cost may or may not address them. Where your agreement can cover them, it should.
Costs of a court case, such as a later suit, are separate from section 25; see our guide on suits and the CPC for the general civil procedure. For tax treatment of professional fees paid, see our income-tax guides.
Section 26: Lok Adalat and Permanent Lok Adalat not affected
Section 26 reads "The provisions of this Act shall not apply to the proceedings conducted by Lok Adalat and Permanent Lok Adalat under the Legal Services Authorities Act, 1987." The marginal heading in the gazette reads "Proceedings of Lok Adalat and Permanent Lok Adalat not to be affected."
In plain terms, the Mediation Act does not govern those proceedings; they continue under the Legal Services Authorities Act, 1987. This matters in three ways:
- A Lok Adalat settlement is not a mediated settlement agreement under section 19. Section 20(1) also excludes an award of Lok Adalat and a final award of the Permanent Lok Adalat from registration under the Act.
- Two sections of the Act are made "subject to" section 26: section 19(3), on submission of a signed mediated settlement agreement, and section 21, on the non-settlement report. See our article on section 19 and our article on sections 21, 24 and 29.
- The substituted section 89 of the Code of Civil Procedure (Fourth Schedule) lists reference to Lok Adalat as a separate option alongside arbitration and mediation; see our article on sections 58 to 61.
The Act does not say whether a dispute pending before a Lok Adalat can be taken to mediation or the other way round, and the text consulted is silent. A party that is unsure which route fits its dispute should ask before filing.
Comparing the two sections at a glance
| Feature | Section 25 | Section 26 |
|---|---|---|
| Subject | Cost of mediation | Lok Adalat and Permanent Lok Adalat |
| Rule | Cost as may be specified; equal sharing by default | Act does not apply to those proceedings |
| Who can change it | Parties, by agreement (for the sharing) | Not stated; the Act simply does not apply |
| Details left to | Regulations of the Council | The Legal Services Authorities Act, 1987 |
A short example
Reddy Pharma and Bose Distributors choose a mediation service provider. Their mediation agreement is silent on cost. Under section 25(2), the mediator's fees and the provider's charges are shared equally. If instead their agreement said Reddy Pharma would bear sixty per cent, that agreement would displace the default, since the section says "unless otherwise agreed by the parties". The names and the split are invented for illustration, and the actual fee level would depend on regulations not in the text consulted.
Need help planning the cost of a mediation?
The Act sets only the default split and leaves the amount to regulations, so the sharing arrangement is worth agreeing in writing. We can help you build it into the mediation clause or the submission agreement through our mediation services.
Key takeaways
- The cost of mediation, other than community mediation, is such as may be specified (section 25(1)).
- Unless the parties agree otherwise, all costs, including mediator fees and provider charges, are borne equally (section 25(2)).
- No amount is stated in the Act, and none is in the text consulted.
- The Act does not apply to Lok Adalat and Permanent Lok Adalat proceedings (section 26).
- Sections 19(3) and 21 are made subject to section 26.
Read next
- Section 19 of the Mediation Act, 2023: mediated settlement agreement
- Section 43 of the Mediation Act, 2023: community mediation
- Sections 40-42: mediation service providers and mediation institutes
- Arbitration vs litigation vs mediation: a comparison
Disclaimer: Based on the Mediation Act, 2023 as enacted and published in the Gazette of India on 15 September 2023, as consulted on 2 October 2026. The Act comes into force by notification; the commencement of each provision, the rules and the regulations should be checked. This article is general information, not legal advice; check the official text before acting.